Corporate Restructuring, Valuation and Insolvency · Winding-up by Tribunal under the Companies Act, 2013

Winding-up Order and Its Consequences under the Companies Act, 2013

Updated 11 October 2026 · Fact-checked

A winding-up order is the Tribunal's order ending a company through winding up. On a petition, the Tribunal can dismiss it, pass interim orders, appoint a provisional liquidator or wind up, within ninety days. Winding up is deemed to commence on presentation of the petition. Suits are stayed without the Tribunal's leave, and employees are deemed discharged unless the business continues.

Understand Winding-up Order and Its Consequences

A winding-up petition is filed before the Tribunal. The Tribunal does not have to grant it. Under section 273 it can dismiss the petition, make an interim order, appoint a provisional liquidator until the final order, order winding up, or pass any other order it thinks fit. The order must be made within ninety days from the date the petition is presented.

There are safeguards. Before appointing a provisional liquidator, the Tribunal must give the company notice and a reasonable chance to be heard. It can skip this only for special reasons recorded in writing. The Tribunal cannot refuse winding up only because the assets are mortgaged for an amount equal to or more than their value, or because the company has no assets. On a just and equitable petition, it may refuse if the petitioners have another remedy and are acting unreasonably in not pursuing it.

Commencement is a favourite question. Under section 357, winding up by the Tribunal is deemed to commence at the time the petition is presented, not when the order is passed. So the date of presentation is the reference point.

Once an order is made, the effects follow. The order operates in favour of all creditors and all contributories, as if made on their joint petition (section 278). The Tribunal must intimate the Company Liquidator or provisional liquidator and the Registrar within seven days. The Registrar endorses the records, notifies the Official Gazette and, for a listed company, informs the stock exchanges (section 277).

On suits, once a winding-up order is passed or a provisional liquidator is appointed, no suit or legal proceeding can be started, or continued if pending, by or against the company without the Tribunal's leave and on its terms (section 279). The Tribunal must dispose of a leave application within sixty days. Appeals pending before the Supreme Court or a High Court are not covered. On employees, the order is deemed a notice of discharge to officers, employees and workmen, except when the business is continued (section 277(3)).

Key rules to remember

Tribunal's orders on a petition (s. 273(1)): Dismiss | interim order | provisional liquidator | winding up | any other order; Order must be made within 90 days from presentation of the petition.
Commencement (s. 357): Winding up commences at the time of presentation of the petition; Not the date of the winding-up order.
Stay of suits (s. 279): After order or provisional liquidator: no suit by or against the company without Tribunal's leave; Leave application to be disposed of within 60 days. Appeals pending before the Supreme Court or a High Court are excluded.
Intimation (s. 277): Tribunal intimates Liquidator and Registrar within 7 days; Registrar endorses records, notifies Gazette and informs stock exchanges if listed.
Employees (s. 277(3)): Winding-up order = notice of discharge, unless business is continued; Applies to officers, employees and workmen.
Winding up committee (s. 277(4)): Application within 3 weeks of order; members: Official Liquidator, nominee of secured creditors, professional nominated by Tribunal; Company Liquidator convenes meetings and reports monthly to the Tribunal.
Effect on creditors (s. 278): Order operates for all creditors and contributories as if on a joint petition; No single petitioner gains exclusive benefit.

How to solve Winding-up Order and Its Consequences questions

Use this order for any case question on a winding-up order. It keeps your answer in the provision, analysis, conclusion format.

1Identify the stage: petition presented, provisional liquidator appointed, or winding-up order passed.
2State the Tribunal's powers under section 273 and the ninety-day limit, if the question is about the hearing.
3Check the safeguards: notice before a provisional liquidator, the mortgage or no-assets proviso, and the just and equitable proviso.
4Fix the commencement date as the date of presentation of the petition (section 357).
5Apply the effects: stay of suits (section 279), employees' discharge (section 277(3)), and operation for all creditors (section 278).
6Note the procedural steps: intimation within seven days, Registrar's endorsement and Gazette notice, and the winding up committee application within three weeks.
7Conclude with a clear answer on the facts, naming the section.

Quickest way: Stage, section, consequence

When to use it: Use when the question is short or time is tight.

Write the stage in one line.
Name the section that governs it: 273, 357, 279, 277 or 278.
State the rule in one sentence with its time limit or exception.
Apply it to the given facts in two lines and conclude.

Common mistakes in Winding-up Order and Its Consequences

Saying winding up commences on the date of the winding-up order.
Students link the word 'commencement' with the order.
Fix: Remember section 357: commencement is the time of presentation of the petition.
Saying the Tribunal must wind up once a petition is filed.
Students ignore the other options in section 273.
Fix: List all five orders. The Tribunal can dismiss, pass interim orders or appoint a provisional liquidator.
Treating the stay of suits as absolute.
Students forget the leave mechanism.
Fix: Suits can proceed with the Tribunal's leave and on its terms. Pending appeals before the Supreme Court or a High Court are not stayed.
Saying all employees are dismissed automatically in every case.
Students skip the exception.
Fix: The order is deemed a notice of discharge except when the business is continued.
Mixing up the time limits.
Ninety days, seven days, three weeks and sixty days look alike.
Fix: Ninety days: Tribunal's order. Seven days: intimation. Three weeks: winding up committee application. Sixty days: leave application.
Refusing winding up because the assets are fully mortgaged or absent.
Students think a company with no assets cannot be wound up.
Fix: The third proviso to section 273(1) bars refusal on that ground alone.

Worked examples

Example 1

A creditor presents a winding-up petition against Kaveri Textiles Ltd on 10 March. The Tribunal passes a winding-up order on 20 May. From which date is the winding up deemed to commence? A supplier had filed a recovery suit against the company on 2 April and it is pending. Can it proceed?

Show the solution

Provision: under section 357, winding up by the Tribunal is deemed to commence at the time of presentation of the petition.
Analysis: the petition was presented on 10 March. The order date of 20 May does not fix commencement.
On the suit: under section 279(1), once a winding-up order is passed, a pending suit against the company cannot proceed without the Tribunal's leave and on its terms.
The supplier must apply to the Tribunal for leave, which must dispose of the application within sixty days.
The exception for appeals pending before the Supreme Court or a High Court does not apply, as this is a suit.

Answer: Winding up is deemed to commence on 10 March. The supplier's suit cannot proceed unless the Tribunal grants leave, subject to its terms.

Example 2

On a creditor's petition against Sagar Engineering Ltd, the company's assets are fully mortgaged to a bank. The company argues the petition must be dismissed. The Tribunal passes a winding-up order and the business is not continued. Advise on the Tribunal's power and on the position of the employees.

Show the solution

Provision: section 273(1) allows the Tribunal to make a winding-up order with or without costs. The third proviso bars refusal only because assets are mortgaged for an amount equal to or more than their value, or because the company has no assets.
Analysis: the company's argument rests solely on the mortgage, so it does not justify refusal.
Order: the Tribunal must pass it within ninety days from presentation of the petition.
Employees: under section 277(3), the order is deemed a notice of discharge to officers, employees and workmen, except when the business is continued.
Since the business is not continued, the exception does not apply.
Procedure: the Tribunal must intimate the Liquidator and the Registrar within seven days.

Answer: The mortgage alone is no ground to refuse winding up. The employees are deemed to have received notice of discharge because the business is not continued.

Exam tips

Write the section number beside each rule. Examiners reward provision, analysis and conclusion.
Memorise the four time limits (90 days, 7 days, 3 weeks, 60 days) and what each attaches to.
In any case with a date, first fix the commencement date under section 357.
Always state the exceptions: employees when business continues, and appeals pending before the Supreme Court or a High Court for the stay of suits.
For long answers, add the winding up committee and its composition under section 277(4).

Practice questions from Winding-up by Tribunal under the Companies Act, 2013

Winding-up Order and Its Consequences in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

Winding-up Order and Its Consequences: frequently asked questions

When does winding up by the Tribunal commence?

Under section 357, it is deemed to commence at the time of presentation of the winding-up petition. The date of the order does not decide commencement.

What can the Tribunal do on a winding-up petition?

Under section 273, it can dismiss the petition with or without costs, make an interim order, appoint a provisional liquidator, order winding up, or pass any other order it thinks fit. It must do so within ninety days of presentation.

Are all suits against the company stopped after a winding-up order?

Under section 279, no suit or proceeding can be started or continued by or against the company without the Tribunal's leave. The Tribunal must decide a leave application within sixty days. Appeals pending before the Supreme Court or a High Court are not affected.

What happens to employees when a winding-up order is passed?

The order is deemed a notice of discharge to officers, employees and workmen. This does not apply when the business of the company is continued.